Functional neuroimaging methods have been increasingly used to elucidate the relation between activity and behavior in healthy people and in individuals with brain dysfunction. More recently functional Magnetic Resonance Imaging (fMRI) has provided a method for improving both time and spatial resolution without exposure to ionizing radiation. Most importantly it permits measures that are complementary to electrophysiology and allow tracing and dissecting components of task related activation. However, while studies of small samples of healthy people have proliferated, few systematic efforts have been done and only a handful of fMRI studies have been performed in schizophrenia. The goal of Project II of the CCNMD is to establish neural circuits recruited at specific stages of stimulus processing and encoding in healthy people (40 men, 40 women) and in patients with schizophrenia (40 men, 40 women). The CCNMD hypothesis will be tested by implementing a cascade of fMRI studies which capitalize on the complementarity between electrophysiology (Project I) and fMRI. Studies will use a high-field (4 Tesla) MR scanning. Parallel studies will be performed within the auditory and visual modalities and each participant will undergo both sensory conditions as well as the electrophysiologic studies described in Project 1. The cascade will trace the stages of information processing from stimulus novelty detection through working memory for target responding to encoding using adaptation to fMRI of standard electrophysiologic tasks that have been associated with specific components of the ERP. The neurobehavioral probes will examine regional activation induced by passive mismatch negativity, active target detection, response to novelty and habituation, working memory and recognition memory. Physiological activity will be measured with the BOLD paradigm using both blocked and event-related contrasts to help establish the stage of information processing in the cortico-thalamic network where patients show abnormal activation. Magnitude and spatial extent of activation will be related to: a. on-line performance for tasks requiring response, with both accuracy and reaction time available. b. basal neurocognitive computerized measures obtained by Core A, which yield estimates of accuracy and speed for eight neurocognitive domains; c. clinical parameters assessed by Core A, which provide measures of symptoms, functioning and course.